Key points:

The Australian Industry Group proposes a $12.50 a week increase, which is a 1.8 per cent annual increase

The Fair Work Commission will decide the minimum wage, and it will apply from July 1.

It currently sits at just under $695 a week, which is roughly $36,000 a year.

The Australian Council of Trade Unions (ACTU) secretary Sally McManus acknowledges a $50-a-week increase would be substantial but argues it is necessary.

"That will be a significant amount to help people deal with the cost of living increases because at the moment working families are struggling to pay the bills," Ms McManus said.

Ms McManus also noted many people on the minimum wage work in retail and hospitality.

"These are exactly the same people who are facing a penalty rates pay cut on the 1st of July as well," she said.

'That would just be a job-killer'

But Australian Industry Group chief executive Innes Willox said a $50-a-week increase would be far too much.

"That would just be a job-killer and the ACTU … is really out of touch with the reality that most employers are facing at the moment," Mr Willox said.

"Australia already has, internationally compared, a very high minimum wage but that's not to take away from the hard times that those living on a minimum wage would often face.

"The point here is that we have to get the balance right where people are able to have employment … and the ability of employers to create jobs and to pay the amounts that are fair and reasonable."

Ahead of UK, Japan by 70 per cent, can afford more

Economist Chris Richardson from Deloitte Access Economics said Australia does pay minimum wage workers more than many other developed countries.

"(The) US, UK, Japan, we're ahead of them by about 70 per cent," Mr Richardson said.

But he said as a nation Australia could pay more.

"Australia can certainly afford to pay higher minimum wages and if it moved broadly in line with recent shifts in Australian wages that would be about a 2 per cent annual rate, if you got ahead of it, you'd be closer to a 3 per cent rate."

The ACTU's $50-a-week proposal represents an annual wage increase of 7.2 per cent, while the Australian Industry Group's $12.50 a week comes in at 1.8 per cent.

How society wants to help the less well-off

Mr Richardson said the minimum wage decision comes down to a question of how society wants to help the less well-off.

"It is a trade-off, it's not as though one answer is magically correct and the other is silly, as a nation we've chosen to have a stronger minimum wage.

"If you didn't want to do it that way, if you were taking care of the less well-off in society through taxes and a social safety net we probably wouldn't be talking about minimum wages at all, you'd be doing more for example on the unemployment benefit instead."

The Fair Work Commission will now consider all arguments and its decision on what the minimum wage should be will apply from July 1.